TotalFinaElf's vice president of investor relations talks about mergers, MBAs and management
'It was when Total decided to list ADRs on the NYSE nine years ago that I got my first opportunity to get into IR. I'd just finished an MBA course in New York when the opening came. My first task was to start the our US IR presence from the bottom up. It was a very exciting opportunity. The company had very few US shareholders, and it was a major challenge for me because I had not previously worked in IR, but fortunately I received a lot of support from our headquarters in Paris.
I've now been working for the company for 15 years. Before IR, I spent some time in a number of finance positions at Total including dealing with international tax and long-term subsidiary financing. I returned to Paris in 1994 to take charge of treasury activity, but before long I was back in IR. Of all my tasks, I enjoy establishing relationships with analysts and investors the most. Making contact, explaining and convincing people that our company strategy is sound isn't always easy, but I enjoy building these relationships.
IR allows me to get involved in articulating the company's strategy. It is stimulating to be involved in the internal dealings of the firm, spending time working with senior management, since it is imperative for the executives to participate in IR activities as well.
Retail program
TotalFinaElf is evolving very rapidly and our IR department has to keep up with all the changes. We have a total of ten people working in the IR department here in Paris. Three people in our team take care of the retail shareholders, of whom we have a total of about 600,000, a number which has increased dramatically since the merger with Elf. We are very active in developing relations with individual shareholders – recently we launched a club for the company's retail investors.
Three more people take care of institutional investors. We now have an extremely diverse shareholder base that has developed over the past few years. When I began in IR, the majority of the company's shareholders were based in France and the government also held a significant stake. This is no longer the case. We now have institutional and retail shareholders from all over world, reflecting the company's global presence. One person analyzes the research produced by sell-side analysts on the wider oil sector and particularly on TotalFinaElf. The research we gather from the sell side has become a useful tool for management, helping them to be aware of how the our strategy is perceived from outside the company.
In addition to our main Paris base, we also maintain an investor relations office in New York to liaise with our US-based ADR and ordinary share investors. Of course, there is no distinction between our US investors and the rest of the world when it comes to making information available. I'm very much aware of the implications of Regulation FD, but we have developed a policy here of making information freely available to everyone who wishes to follow the company. Our aim is to be as transparent as possible, and technology helps us achieve this through the internet and e-mail distribution.
Both our shareholder base and the company's activities are geographically diverse. We don't look at our trading environment as just France; rather, we are a global company. Our main focus here in the IR department is to make sure that everyone has equal access to information, and that makes the principles of Regulation FD in line with what we are developing. We ensure that all investors, big or small, in France or elsewhere, have the same free access to company information.
Included in this drive to increase the flow of information has been our decision to move to quarterly reporting, starting next year. Presently, this is what occupies much of my time. You can imagine how much work has to go into preparing figures and gathering the necessary data. We are also organizing regular site visits for analysts, taking them to various facilities around the world. And given the massive size of the company, something big seems to happen here almost every day.
Merging with Elf
In the corporate world, nothing compares to a giant merger such as when TotalFina joined with Elf. Both companies already shared similar investor bases, so at the time of the merger, our job was to convince shareholders that the project we had launched to merge the two companies made sense. The whole merger process, from announcement to completion, was an extremely intense period. It began in July 1999, when the deal was announced, and lasted until mid-September when a friendly merger was agreed upon.
Oil companies have been making headlines in Europe in recent months following the rise in the price of crude oil. However, that hasn't had much impact on our work in IR. Because we have put maximum effort into making the company as transparent as possible, analysts and investors can now easily identify the likely impact on operating income resulting from external factors such as a sharp rise in the price of oil, moving euro/dollar exchange rate or changes in European refining margins. Analysts and investors are now well used to working out how such external factors affect a company like TotalFinaElf.
French companies have also been in the spotlight recently following criticism of developments in French corporate governance. This is a difficult issue to comment on. TotalFinaElf regards its main competition not as French companies, but as other global oil and gas firms, so for us it is more important to look at the corporate governance methods of our competitors rather than the standards of other French companies. Corporate governance in France has come a long way in recent years, but that's not to say there isn't always room for improvement. At TotalFinaElf, we continue to improve corporate governance through increasing transparency. We explain in detail who the board members are, how many shares they own and what relationship, if any, they may have with the company. Matters such as executive compensation are being dealt with in a better way; so the company is going in the right direction.
Mid-caps too
Just as corporate governance is evolving in France, investor relations is too. Today IR is no longer the preserve of only the large cap French companies; increasing numbers of mid-cap firms are developing IR programs to get better access to the equity markets.
We have an active investor relations association, Cliff (Cercle de Liaisons des Informateurs Financiers en France), where we regularly discuss the hot topics and share views on IR issues. For example, we will soon have a presentation from a spokesman of the French market regulator, the COB (Commission des Opèrations de Bourse), who will be discussing the attitude of the regulator toward fair disclosure. Cliff also held meetings with the Paris Bourse to discuss the possible consequences of the Euronext stock market merger, which has so far only affected the technicalities of exchange trading, rather than making a deep impact on the nature of our business.
Investor relations at TotalFinaElf has changed greatly since I began working in this field. It's just a completely different world in terms of investor relations. Not only has our shareholder base changed dramatically, investor relations has moved from delivering mere financial information to the market to effective, ongoing communication with the investor base. Moreover, investor relations is not just a tool for communicating with investors; it has a significant impact on internal policy, because the objectives that the company communicates to the financial community correspond exactly to the internal objectives set all across the firm in a much more detailed manner.
Management is very involved in investor relations and this is absolutely key for the success of the program. They continually keep a keen eye on the share price, though it might also be in their interests to do so, because they too are shareholders.'
